Inflation pushes bond yields to new high

“The domestic rates market was rocked by the Australian inflation shocker,” said BNZ interest rate strategist, Jason Wong.

Data showed inflation rose 0.7% in the September quarter, putting annual inflation inside the Reserve Bank of Australia’s target range at 2.1%.

This saw the yield curve flatten significantly as rates across the board hit fresh highs for the current cycle, he said.

The yield on a 2-year government bond is now comfortably above 2% – up from negative yields this time last year – and 10-year bonds are yielding 2.6%, up from 0.5% a year ago.